CASE STUDY ANALYSIS: PLANET HEALTH -Abhishek Choudhry (8411048) Introduction: Rohit Patel is the managing direction and

promoter of Sagar Drugs & Pharmaceuticals. Rohit is a postgraduate in Business Management with specialization in marketing. He is director of Sar Investments and GPSAR Healthcare Ltd. and managing partner of Ankur Industrial Corporation. His areas of operations are finance, planning and strategic global and local marketing. Rohit won the AMA- Atlas Dyechem Outstanding entrepreneur of the year 1997. He is member of the executive committee of the Gujarat Chamber of Commerce and Industry. (Source: IIMA entrepreneurial cell) With the increase in demand of standard health care facilities and the narrowing of the Indian pharmaceutical industries to patented and non patented drugs, Rohit sees an opportunity to set up a chain of world class health care facility stores in India, instead of manufacturing chemicals for drug giants who shall eventually take up the market after the enforcement of patent of products act. With the introduction of the patents act in India, the no. of brand names in medicines were to decrease however the sale of Generic medicines shall increase and this shift in the market is a hint for the introduction to Organised Retailing. In organized retailing, a many brand names with their entire collection are sold under one roof. However this requires that the Brands be limited and there be limited competition in a particular segment of the product under sale. Objective: Rohit wants to develop a business strategy for introducing Organised Retailing in the field of pharmaceuticals, in India. Problems Existing Retail Framework: According to the global consulting group, A. T. Kearney India Ltd, small retailer in India continues to be favored both by the marketer and the customer. For the marketer, small retailers are becoming increasingly important in the retailing pyramid. This is primarily because of the extreme increase in Stock Keeping Units (SKUs). This SKU explosion has caused intense pressure on shelf space. Marketers, therefore, have been forced to seek width in distribution rather than depth. As in the case of the proposal of planet Health as well, there is an existing framework of many retail outlets across the county and Planet Health if incepted would have to carry approximately 20,000 SKUs at a time. A retailer normally deals directly with wholesalers with whom he is able to negotiate rates. Retail consolidation (consolidation of buying power) by Planet health is unlikely to hurt small retailers simply because it will affect manufacturers directly, who will not want to compromise on the distribution reach to offer large volumes to just a big retailer.

And they are the small retailers who form an integral part of the wide distribution network set up by the large Pharmaceutical companies. Marketers have also found that private/store brands from supermarkets can prove to be a threat to their own brands and hence, desist from encouraging retail consolidation. Customer: The customers favor the small retailer for the low prices and services he offers. The small retailer is providing all those services which supermarkets normally don't. This has increased competitiveness in the trade. This competitiveness has improved customer service levels which are reflected in the wide-ranging facilities being offered by a retailer. Such facilities include telephone order system, credit facilities, home delivery, and branded products procured on order (in case of stock-outs). More importantly, he is available next door; most often the owner himself is present to offer personalized service. In this way, he is able to develop a strong relationship with his customers who, over a period of time, become extremely loyal. Capital: Here in India, the capital needed to set up a small retail outlet is negligible, and the operating costs/overheads are low. Supply chain integration does not quite matter in the case of the small retailer because of the small scale of his operations. Moreover the small retail outlets generally do not invest in the infrastructure required for such medicines that require special attention and usually place an order on demand. However for planet Earth to function as a true brand name and cash upon its ethics, it must ensure that it installs a world class facility for the storage of medicines and proper disposal of expired medicines. Apart from these a huge amount of investment will be required in providing security against shrinkage (about 2 millions) and in the automation of the store. Exclusiveness of the Store: Though Planet health shall keep all the medicines, Health care foods and other Health care Products under one roof but the major sellers of the pharmaceuticals market, which is the prescribed drugs sector which forms the 80% of the total sales is common amongst Health Planet and the small retailers. Other Roadblocks: Non-availability of trained manpower, especially at the management level, poses a key risk for the retail sector. Besides, as organised retail grows rapidly, there will be pressure on existing players as new entrants look for trained manpower at various levels. Supply Chain Management (SCM) efficiencies are essential to retailers to maintain and improve margins. SCM includes vendor and logistics management which is underdeveloped in India. However, with growing size of operations, SCM efficiencies will become a key differentiator of profitability in retail. (Courtesy: AT Kearney) Bussiness Plan: The investment in infrastructure required by the retail stores which can serve the purpose of Planet health can be greatly reduced by acquiring existing retail outlets across the country suiting the needs of the company. Apart from this the company would invest in

building brand name, by giving a different outlook to the retail store and the staff for the store. The Company shall provide a Pharmacist advised health care service to all its customers, and would aim to cure the illness instead of just administering drugs. This would add value to the service of the company and would add a personal touch to each customer that becomes associated with the store. The store shall have a 24 x 7 window to ensure more customer hits, it shall in each and every way that a long term relation is made with the customer and that not only the customer comes to the shop for his/her medical needs but also for daily health care products. The setting up of the interior of the shop shall ensure that a customer actually walks through the whole collection of the outlet before making any payments if at all. The ambiance of the store shall be made pleasing for the customer using Air Conditioners and a walkthrough counter. The customer shall also find it easy to locate the store from a distance, and would have no problem in parking his/her car. The detailed financial analysis of the plan shows that a revenue of Rs.1000/- per foot per month is required just to break even for the investment. FUTURE PLAN Now that the business plan is in the hands of the chairman, it is essential for him to set up a team to scrutinize the plan according to the existing market conditions. The team should not only look into the feasibility of such an option, but also into the question as to how would such a big investment affect the parent business. The team should analyse the market in order to assure that the company will make profits after breaking even against the investments made. The team should also scrutinize the management structure as proposed by the consulting group and should give suggestions on the following guidelines: 1. Should the company venture into the field of organized retailing at all? 2. If yes, is the business model develop above adequate for the same? 3. What are the modifications required in the above plan and why?

After this the chairman shall evaluate the report and If it positive, he shall start working with the idea expressed in the business plan. However, the business model should be dynamic and should incorporate changes according to the needs of the hour. Furthermore if the report is negative the Chairman may like to think on the lines of smaller chains of retail stores which are somewhere in between the mega market for health products and the small retails of pharmaceuticals.